Walkers comments on IOSCO recommendations for crypto sector

Commenting on the new policy recommendations for crypto and digital asset markets published by IOSCO, the global standard setter for securities markets, Ian Mason, a partner in the Global Regulatory and Risk Advisory Group at law firm Walkers and former senior financial services regulator, said:

"This is a landmark development for the governance and regulation of the fintech sector. Industry players and advisors will be scrutinising the detail of the recommendations to understand the direction of travel and implications for their assets and markets.

"To date, regulatory authorities have adopted differing approaches to the regulation of crypto-assets, from the hostile to the more liberal. IOSCO is advocating a more global, joined-up approach, based on principles and outcomes.  It is understandably concerned about risks to investor protection and market integrity arising from the crypto assets sector. The report advocates a robust baseline regulatory response.

"Particularly significant are the recommendations on aligning regulation of crypto-assets with more traditional securities regulation in areas such as insider dealing, market abuse and client order handling. If implemented, these would have big implications for crypto market participants in terms of needing to establish systems and controls, and compliance monitoring in these areas.

"Regulatory authorities will now need to carefully consider how to implement this suite of recommendations."

The IOSCO recommendations, which can be read in full here, cover six key areas:

  • Conflicts of interest arising from vertical integration of activities and functions
  • Market manipulation, insider trading and fraud,
  • Cross-border risks and regulatory co-operation,
  • Custody and client asset protection,
  • Operational and technological risk, and
  • Retail access, suitability, and distribution

IOSCO drives regulation of more than 95% of the world's securities markets. It will publish a related report later this year on decentralised finance or "DeFi".

Ian MasonPartnerT +1 345 814 4600ian.mason@walkersglobal.com

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